UpGrad arm buys WOLVES India for undisclosed amount

UpGrad Rekrut, a fully-owned subsidiary of Ronnie Screwvala-led upGrad, has acquired a 100% stake in WOLVES India, a recruitment and staffing firm for an undisclosed amount, the company said on Thursday.

Bengaluru-based WOLVES India will continue to operate independently. The company claims to specialise in placing high-quality tech talent across startups, along with mid and large-sized organisations in India and overseas.

With 70 professionals, WOLVES has closed over 5,000 placements in technology and product roles, it said.

The tech industry in India will continue to observe steady demand for skilled talent and is expected to become a $350 billion market by FY26, according to the release. UpGrad aims to become the largest tech-talent powerhouse. “This (acquisition) aligns with our ambition of becoming the global talent superpower in the next few years,” the management at upGrad Rekrut said.

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Detect Technologies gets $28 million from Prosus Ventures, others

Detect Technologies, a software-as-a-service (SaaS) enterprise, has raised $28 million in primary and secondary funding in its Series B round led by Prosus Ventures. Existing investors Accel and Elevation Capital, Shell Ventures, Bharat Innovation Fund and Bluehill Capital participated in the round, too. 

The company will use these funds to further expand and strengthen its sales and operations across international markets in North America and Europe and widen its product suite, it said in a statement on Thursday. 

Detect Technologies provides cloud-based applications to industries to automate and enhance visibility of industrial risks and improve productivity.  

“Our vision is to provide actionable intelligence to help industries mitigate their risks while achieving their business objectives sustainably. We are grateful for the confidence bestowed upon us by our investors, and look forward to accelerating our market expansion,” said Daniel Raj David, CEO and co-founder, Detect Technologies

The company claims that its insights have helped industries improve workplace safety, monitor work processes effectively, increase visibility of external risks on their infrastructure and improve productivity.

“Frontline worker safety and asset productivity are massive unsolved global problems, with significant financial and ESG-related implications. Detect team has done a phenomenal job in building a machine learning based, plug and play cloud solution to automate detection of safety violations on a near real-time basis, which is reflected in their market leadership, quality of logos and the recent as well as expected scale up in the business,” Ashutosh Sharma, head of investments, India, at Prosus Ventures, said. 

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Higher volumes could turn securitisation into key funding source for NBFCs: Crisil

Non-banking finance companies (NBFC) are likely to rely on securitisation as a funding source led by higher volumes, which will lead to increased disbursements by non-banks after a slowdown. Banks can also improve their retail and priority sector targets through securitisation, ratings agency Crisil said in a report.

Securitisation volume grew by 70% to Rs 35,000 crore in the first quarter of the current financial year led by higher participation from public and private sector banks along with other financial institutions. Foreign financial institutions, including banks, acquired 17% of all assets securitised. A stable market environment could mean deeper participation by other large investors, including foreign institutions and mutual funds, the agency said.

Additionally, the base effect caused by low volumes last fiscal due to second wave also led to sharper growth in Q1FY23. The growth in securitization volumes would have been higher if not for higher interest rates, which prompted divergent yield expectations among NBFCs and banks the ratings agency said.

“More than 80 non-bank entities being present in the market in the first quarter, up from 50 last fiscal, indicates strong comfort originators have with the securitisation process. Market activity in the past quarter also reflected the diversity of various asset classes across secured and unsecured loan categories,” Krishnan Sitaraman, senior director and deputy chief ratings officer of CRISIL Ratings said.

Mortgage-backed securitisation (MBS) loans comprised 45% of the total volume compared with 53% in the previous year while asset backed securitisation (ABS) comprised the balance.

Within the ABS category, commercial vehicle (CV) loans comprised 49%, and microfinance 20% of transaction value, with many underlying loans eligible for priority sector lending (PSL) classification. Securitisation in gold loans (14%) continued to rise, while two-wheeler, education, school finance and unsecured loans saw renewed investor interest.

However, any sharp rise in interest rates, high inflation and future waves of the pandemic impacting economic activity could be potential headwinds for securitisation volumes this fiscal, the report said. 

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L&T becomes debt-free on cash, cash equivalents in FY22

Larsen & Toubro (L&T) has emerged debt-free after considering cash and cash equivalents in FY22, a move that would help the engineering and construction conglomerate rekindle its earlier stalled buyback process.

“There was a net increase of Rs 2,164 crore in the cash balances as of March 31, 2022, as compared to the beginning of the year. The company has become debt-free after considering cash and cash equivalent during the year,” according to the company’s annual report for FY22.

This paves way for L&T to buy back shares, which were put on hold after the Securities and Exchange Board of India (Sebi) had denied permission for its Rs 9,000 crore buyback offer in 2019. The market regulator had rejected the company’s proposal on the ground’s that the group’s consolidated debt to equity ratio would cross two times the paid-up capital and reserves, assuming full acceptance of the scheme.

L&T’s total borrowings fell to Rs 20,298 crore as of March 31, 2022, from Rs 24,474 crore in the previous year. For the year, its gross debt-equity ratio fell to 0.30:1 from 0.40:1 a year ago, it said in the annual report.

L&T also intends to advance its green business portfolio, which constituted 38% of its standalone revenues in FY22, including forays into new businesses of manufacturing storage batteries. The company’s board has approved entry into the Green Energy business through green hydrogen and derivatives and advanced chemistry cell batteries (such as lithium-ion batteries). These new businesses are proposed to be set up in FY23 through joint ventures with L&T having a dominant share.

The infrastructure major would venture into the business through technology tie-ups and business partnerships. Further, the company has also identified green hydrogen, clean energy technology and offshore wind as new growth avenues.

“We do believe that alternative fuels such as green hydrogen will go a long way to create a cleaner environment and contribute towards the nation’s energy security. We have a unique opportunity to play a significant role to accelerate the ecosystem around green hydrogen, with our thrust in both the EPC (Engineering, Procurement and Construction) and BOO (build own and operate) spaces…,” L&T chief executive officer and managing director SN Subrahmanyan said.

In FY22, L&T’s revenue from its green portfolio of businesses stood at Rs 38,843 crore. For the reporting year, it contributed 38.2% of total revenues, an increase from 33.2% in FY21 and 31.4% in FY20.

The company’s green portfolio comprises projects embedded with advanced technology, solutions centred around renewables, water and effluent treatment plants, efficient power distribution, mass transit systems and green buildings.

L&T’s order book stood at Rs 3.58 trillion as of March 31, 2022, with that from the infrastructure segment standing at 73%. L&T is targeting group revenues of Rs 2.7 trillion and an 18% ROE by FY26.

Earlier in May, L&T said it plans to double its revenue and order inflows by FY26, under ‘Lakshya 2026’, a five-year plan with FY21 as the base year.

“India is expected to post top quartile growth among emerging nations in the medium term. Challenges hovering on the horizon include runaway oil prices, supply chain disruptions and the US rate hikes affecting capital flows into India. Despite these roadblocks, however, our view is that the bold structural reforms carried out by the Government in the last couple of years will pave the way for improved quality of growth,” said AM Naik, chairman of L&T.

The company also plans to divest non-core assets, he added. The conglomerate also handed out a paycheck of Rs 61.27 crore to Subrahmanyan in FY22, which was about a 115% hike over the previous financial year, the annual report said.

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PNB, 3 other PSU banks activate account aggregator system

Public sector lender Punjab National Bank (PNB) has gone live on the account aggregator ecosystem as financial information user (FIU) as well as financial information provider (FIP), the lender said in a press release. Other than PNB, Union Bank of India, Canara Bank and Indian Bank are the three other PSU lenders who have connected to the account aggregator system.

“Punjab National Bank is working on multiple business use cases which can leverage on the account aggregator ecosystem and offer interesting products to its customers. This will further enhance the outreach of the bank to provide customized digital products to its customers,” Atul Kumar Goel, managing director and chief executive officer of PNB said.

Other PSU lenders are in various stages of implementing the process of connecting to the account aggregator system. While State Bank of India (SBI), Bank of Baroda and UCO Bank are in the testing phase, Indian Overseas Bank, Punjab and Sind Bank, Bank of India and Bank of Maharashtra are in the development phase. Central Bank of India is in the evaluation phase, according to information on Sahamati, a member-funded industry alliance.  

Most of the major private sector banks such as HDFC Bank, ICICI Bank, Axis Bank, IndusInd Bank and Kotak Mahindra Bank have also connected with the account aggregator system. As of Monday (July 11), a total of 56 banks, fintechs and non-banking finance companies (NBFC) are live on the system.    

Earlier this month, Union Finance Minister Nirmala Sitharaman had directed all public sector banks to implement the account aggregator system by the end of July. The account aggregator system is a financial data exchange where banks, fintechs or NBFCs can exchange customer data after taking consent from such users. The move is expected to give consumers more control over their data and also bring down processing costs for banks through access to better data. The system was introduced in September 2021.  

Under the account aggregator system, a lender who requests the data is called financial information user (FIU) and the one that provides the data is called financial information provider (FIP). The data cannot be shared without taking consumer’s permission. The entities which facilitate the data exchange are account aggregators. OneMoney, FinVu, CAMS and NADL are providing facilitation services after receiving approval from the Reserve Bank of India (RBI). There are 8 entities awaiting RBI approval for providing account aggregator services, a National Securities Depository Ltd (NSDL) and PhonePe.

Since the launch of the system in 2021, 8.6 lakh accounts are linked by account holders and 8.1 lakh consent requests have been fulfilled so far. 

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E-commerce firms may ramp up hiring on high demand during festive season

Hiring by the e-commerce ecosystem is expected to grow by 20-25% over the next three months as companies gear up for high festive season demand after two years of muted sales due to the Covid-19 pandemic.

The roles in demand are those high on delivery and tech-related skills to manage customer acquisition, engagement and retention for platform users. Entry-level roles for customer service and management are driving maximum demand. In addition, digital marketing will be another segment that will see high demand for professionals, according to Indian Staffing Federation.

E-commerce companies say that the overall consumer sentiment is positive and are anticipating good sales this year, which will boost hiring. Anika Parashar, founder and CEO of The Woman’s Company told FE that while the factors like the festive season and speed of vaccine deployment are boosting consumer sentiments, another reason behind the improved hiring outlook is strong growth in business activity, which has pressed the need to hire more.

“With the festival season just around the corner, we are witnessing an increase in sales. We will need more hands-on deck and are looking at a 20% increase in hiring,” Parashar said. The company is looking to add resources to its digital teams and on-ground sales teams.

It is not just the e-commerce players but also the support system in terms of logistics companies who are also building capacity to cater to the anticipated increase in demand. Shailesh Kumar, founder of CABT Logistics said that as the festival season inches closer, companies in the logistics sector have hired gig workers, increased capacity, and are expanding their operations at new locations in preparation for the upcoming festival season.

“We at CABT have launched a delivery partner programme, to hire over 15,000 gig workers during the season to boost the company’s delivery capabilities, also we are adding many rapid delivery points across key metros, including Delhi, Mumbai and Bengaluru and are also hiring for over 100 positions across verticals such as sales, servicing and operations,” Kumar said.

Roadcast, a vehicle fleet management and delivery tracking company is focusing on hiring across roles that will eventually help them build their online footprint that will ensure a wider reach with minimum spending on fixed costs. Rahul Mehra, co-founder of Roadcast said, “Last year there was a 20% increase in hiring but this year we are looking at a 35% increase across specific roles such as customer servicing, development and project management.”

According to Mehra, with consumers becoming more inclined toward ordering online, the demand is sure to increase this festive season. “A lot of brands are now offering gift cards, and vouchers that customers can redeem online, further increasing the requirement in the delivery space,” he added.

Even though high inflation may dent some demand momentum, the hiring fraternity said that companies are optimistic that the sales will be better than in the last two years, and are therefore hiring on a war footing. Suchita Dutta, executive director of the Indian Staffing Federation said, “While inflation may impact but the festive season will not witness as much tapered response as was seen in the past two years. The hiring plans remain aggressive in the current quarter as after training and talent absorption, the workforce will need to be ready in time to meet the growth in demand.”

Also, with the current rising inflation, fuel prices and a general increase in the overall spending in cities, the remunerations are expected to be higher this time around, which are already inching up.

For instance, Kumar of CABT said that its partners currently earn from Rs 25,000 to Rs 40,000 per month, depending on factors such as the number of deliveries completed, working hours and the distance they travel. “This is a big leap from the Rs 10,000 – Rs 25,000 per month that the workers earned last year. Due to higher incentives, blue-collar workers’ incomes have increased by at least 25-30% on average compared with last year,” he said.

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Metal companies want new policy to spur urban mining

The minerals and metals industry wants the government to devise a new policy for urban mining, and insert a special provision in the extant rules regarding deep-seated minerals such as zinc, lead and copper.

Urban mining involves extracting metals, mainly non-ferrous varieties such as aluminium, copper, lead and zinc, from electronic and other wastes that urban areas predominantly generate. The potential in this area is seen to be big.

Hindalco’s managing director Satish Pai said: “We have to introduce in India a concept called urban mining. We sell around 4 million tonne of aluminium. Out of this, more than 60% is recycled aluminium.”

At an event organised by the ministry of mines recently, he said, “In fact, most of the big companies in the world today, including us, are investing heavily into recycling, which is the whole concept of urban mining.”

Pai, who has recently been appointed as the new chair of the International Aluminium Institute (IAI), the only global body for primary aluminium producers, said the government should increase urban mining through proper policy initiative. Hindalco is the second largest producer of primary aluminium in India.

Hindustan Zinc’s CEO Arun Misra said the deep-seated minerals, including gold and platinum, should have a special provision on the governing rules, because different facets of mining deep-seated minerals and bulk minerals such as iron ore and bauxite are different. Misra said that while a bulk mineral can be located, explored and extracted easily, the “deep-seated minerals are very difficult to locate, define and extremely difficult to mine”.

Typically, in a 100-hectare iron ore lease area, 90% of the area would be resource-bearing. But for deep-seated minerals, material can be found only in seven hectares of area and nothing in the rest. Even of the mined minerals, only a fraction can be used for metal production.

NMDC’s CMD Sumit Deb said some structural changes, such as the ‘one Bharat-one tariff’ policy for electricity and single-window clearances, are required in the country to give the sector the right impetus. Pankaj Satija, MD, Tata Steel Mining, said the country needs to rev up investment in exploration activities.

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Scale of tech adoption shows it has become a behavioural change: Tata Sons chairman N Chandrasekaran

Tata Sons chairman N Chandrasekaran on Wednesday said the adoption of digital technologies by everyone, whether rich or poor, has demonstrated that it has become a behavioural change.

Addressing the 59th convocation ceremony at IIT-Madras where he was the chief guest, Chandrasekaran said: “It is clear that it is going to be a digital world and a digital economy.”

“There is going to be no domain industry that is going to lead by itself, whether it is healthcare or manufacturing. That can happen only when all of you (students) play a role and it is going to be an exciting role driving transformation across sectors,” he said.

Pointing to the opportunities available for the graduating students, he said it is an exciting time to start one’s career, especially so in India. “The country’s economy has grown 100 times in the 75 years since 1947 to today. Nobody would have predicted India would play a significant role in the technology sector. The country’s per capita GDP is going to increase significantly in the next decade and decades to come,” he added.

However, the Tata Sons chairman said, there are still some issues – such as a lot of people in the country still don’t have access to many things, be it education and healthcare or market access. “We have a lot of things to fix, but we have come a long way,” he added. According to Chandrasekaran, the country is at a time when there is a tremendous opportunity for India, Indian businesses and for the social sector.

Speaking about the availability and resilience of the supply chain, he said: “I always talk about an India-plus model which consists of a vast number of things – semiconductors, batteries, new materials, and new formulations. These require talent, more so tech talent,” he added.

Pawan Goenka, chairman, board of governors, IIT-Madras, said: “This is a very important decade for India. The world order is changing. India today has opportunities like never before across sectors and geographies. Technology is revolutionising every aspect of our lives. There could not have been a better time for you to graduate and make a difference to the lives of millions of people.”

He said the new technological revolution across the world is being driven by startups. India has come of age in its startup ecosystem and IITM is playing a key role in it, he added. “What I personally appreciate is that IITM-incubated startups tend to be in deep-tech areas like advanced communication, agritech, artificial intelligence, IoT, green energy and the space technology,” Goenka said.

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Lenders may seek review: Banks stare at 8% recovery from first NARCL sale

India’s bad bank has offered to buy the first toxic asset at just 8% of its outstanding loan value, a deal unhappy lenders are planning to negotiate in the hope that the recovery gets better, said two bankers in the know.

According to the bankers cited above, the National Asset Reconstruction Company (NARCL) has bid about Rs 80-85 crore for Rainbow Papers, a non-performing asset which owes banks Rs 1,100 crore.

The consortium is led by Indian Overseas Bank (IOB), which is planning to hold a meeting with other member banks to take a call on the future course of action. “A meeting had been planned for last week, but that got cancelled. IOB is expected to convene another meeting where banks will decide how to go ahead with the resolution. They want to conclude it by end-August,” said one of the bankers.

Emails seeking responses from NARCL and IOB remained unanswered till the time of going to press.

According to the last available annual report for Rainbow Papers for FY18, other bankers to the company were Corporation Bank (now merged into Union Bank of India), Union Bank, Allahabad Bank (merged into Indian Bank), Axis Bank, Bank of India, Punjab National Bank and Dena Bank (merged into Bank of Baroda).

The bid for Rainbow Papers was the first one made by NARCL after repeated delays in the operationalisation of the institution. It had initially missed the March 31, 2022 deadline for acquiring 15 assets with an aggregate exposure of Rs 50,000 crore as hiring for some senior positions took time. The bad bank put in the bid for Rainbow Papers in June, ahead of the June 30 deadline for operationalisation.

Bids made by NARCL are different from those of other ARCs in the way that security receipts (SRs) to be issued by the former will be sovereign-backed. While most deals between banks and ARCs are now all-cash, the NARCL will have an upper hand, having to pay just 15% of the deal amount as upfront cash and the rest in the form of SRs.

According to a paper published as part of the Reserve Bank of India’s February 2022 bulletin, the average rate of recovery for seven bad banks in Asia and Europe ranged between 22% and 87%.

For Indian lenders, recoveries through the Insolvency and Bankruptcy Code (IBC) route have been below par of late. Recovery for financial creditors from the resolution of stressed firms under the code crashed to a record quarterly low of 10.2% of their admitted claims during the three-month period ended March 2022. At Rs 1,288 crore, the realisation for financial creditors in Q4FY22 dropped below the assets’ liquidation value  of Rs 1,316 crore for the first time, according to data from the Insolvency and Bankruptcy Board of India (IBBI).

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How can a home loan calculator make it simple to plan for a home loan?

Buying a house involves a huge amount of money. So, very few people have the capacity to buy one outright using their own funds, while the majority of people need to take out a home loan to buy their dream home.

As a home loan provides capital to buy a long-term asset, helps in saving rents by moving to own house and also provides tax benefits on interest payment and principal repayment, people intending to buy their own house prefer to avail the loan.

“Buying a home is one of the top financial goals for many of us. However, because of the high cost of real estate, it becomes challenging for people to purchase a home out of their own pocket. Therefore, a home loan is a practical choice for many people to buy their ideal home. However, taking out a home loan necessitates a sizable shift in the spending strategy to pay the EMI. As a result, the home loan should be affordable and appropriate for you. This is where a home loan EMI calculator comes into the picture to help you figure out how much EMI you’d have to pay each month to repay your loan in a specific amount of time,” said Pramod Kathuria, Founder & CEO, Easiloan.

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Talking about what a home loan EMI calculator does, Kathuria said, “The Home Loan EMI Calculator is an online tool that helps you to calculate your monthly home loan EMI. The user-friendly design of the online calculator tools enables you to quickly toggle between your selected interest rate, loan amount, and loan tenure, providing you with various repayment options based on your preference.”

Kathuria explains how calculating home loan EMI can make financial planning easy for you:

It helps you choose the right lender and the right loan amount

With several lenders offering easy home loans, it becomes challenging to choose the right one. In this case, you can use the EMI calculator to analyse the total cost of various loans and decide which offers the best value for your money.

Additionally, it is wise to avail a loan amount that you can comfortably repay without putting further strain on your finances. Hence, you can use the home loan EMI calculator to get a better idea of how much home loan amount you can afford. This will make repayment easier and reduce the likelihood of default.

It helps you choose the suitable tenure

The tenure of the loan is crucial in determining the monthly instalment amount. Your house loan EMI will be less if you have a longer tenure, whereas a shorter term would result in a larger EMI. Therefore, select a loan term that makes your EMIs manageable based on your income and spending. You can find a suitable tenure with the EMI calculator.

It simplifies planning for prepayment of the loan

Having an idea about the expected EMI makes planning for the home loan prepayment smooth. This can lower your interest payment and hasten the repayment of your debt. For example, if you are aware of your EMI, you may easily arrange part-prepayments and plan the timing of your investments.

Borrowing mistakes that may leave you bankrupt

It’s easy to use

There are no difficult calculations involved in using a home loan calculator. All you have to do is enter the principal amount, interest rate, and loan term, and in a matter of seconds, accurate computation of your EMI will appear on your computer screen.

“The home loan calculator is one of the most valuable tools, which makes the process of availing and repaying a home loan simple and convenient. So, calculate your home loan EMI and get a home loan today to buy the house of your dreams. However, do your homework on the lender before applying for a home loan to avoid any inconveniences later,” said Kathuria.

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Euro falls below dollar parity for first time since 2002

The euro dropped below parity against the dollar on Wednesday for the first time in almost two decades, as a hawkish U.S. Federal Reserve and growing concern about rising recession risks in the euro area continued to batter the currency.

The latest slide came after another hot set of U.S. inflation data.

Europe’s single currency started this year on a strong note given a post-pandemic economic recovery. But Russia’s invasion of Ukraine, surging European gas prices and fears that Moscow could cut off supplies further has raised the spectre of recession and hurt the euro.

Heightened global uncertainty and an aggressive Fed monetary policy stance meanwhile have benefited the safe-haven dollar.

The euro tanked as much as 0.4% to a low of $0.9998 at 1245 GMT, its lowest level since December 2002. It was last down 0.1% on the day at $1.005 and has lost more than 10% so far this year.

“Gas rationing, stagflation, an expected recession, they are all good reasons to be bearish on the euro,” said Stuart Cole, head macro economist at Equiti Capital in London before the euro crossed that threshold.

He add that these factors will make it harder for the European Central Bank to hike interest rates, further widening the interest-rate differential with the United States.

Since becoming available freely in 1999, the single currency has spent very little time below parity. In fact, the last time it did so was between 1999 and 2002, when it sank to a record low of $0.82 in October 2000.

Within its relatively short two-decade history, the euro is the second most sought after currency in global foreign exchange reserves and daily turnover in the euro/dollar is the highest among currencies in the global $6.6 trillion-per-day market.

The euro’s slide is a headache for the ECB. Allowing the currency to fall only fuels the record-high inflation the ECB is battling to contain. But trying to shore it up with higher interest rates could exacerbate recession risks.

The ECB has so far played down the issue, arguing that it has no exchange rate target, even if the currency does matter. Also on a trade-weighted basis — against its trade partners’ currencies — the euro is down only 3.6% this year.

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Darjeeling tea brand takes a hit in global markets: India plans curbs on tea imports from Nepal

India is likely to impose restrictions on tea trade with Nepal, as duty-free exports of low-quality tea from the neighbouring country being blended with Darjeeling tea is hampering the latter’s brand globally.

The Union commerce ministry has already brought in regulations to check the influx of cheaper tea from Nepal, while the parliamentary standing committee on commerce has recommended a review of the Indo-Nepal treaty to incorporate stringent requirements for a “certificate of origin” on tea imports from Nepal.

A large section of importers are passing on inferior Nepal tea as Darjeeling tea at much lower prices, causing huge financial loss to Darjeeling planters. Some local traders are also re-exporting the Nepal tea to global markets as Darjeeling tea. The premium authentic Darjeeling tea is also selling at a lower price in the global market as a result.

While the Tea Board of India says it has started acting on the commerce ministry’s recommendations, small tea garden owners, mostly selling their product in auctions, say Nepal is still continuing to dump its tea in India.

The Revised Treaty of Trade between India and Nepal signed on October 2009 is valid up to 2023. It lets each party exempt, on a reciprocal basis, mutually decided primary products from basic customs duty and quantitative restrictions.

Tea is among such products eligible for preferential treatment. But exports of Indian tea attract a 40% import duty in Nepal, while tea imports from Nepal attract zero duty. This leads to unhampered and easy influx of substandard Nepal tea being sold and re-exported as premium Darjeeling tea, which diluting the global brand image and affecting prices, the parliamentary panel said in its 171st report.

The panel has recommended setting up a robust administrative framework and import inspection regime, and establishing an NABL-accredited quality control lab in Darjeeling district to check each consignment of imported tea. The panel recommended an inspection by the Directorate General of Trade Remedies regarding the dumping of tea, while looking into the possibilities of an anti-dumping duty.

A Tea Board official told FE the board has already formed a committee on the issue following a direction from the ministry of commerce and industry to draw and test samples at an NABL-accredited lab. This is to check if imported tea is FSSAI-compliant.

However, PK Bhattacharya, secretary general of the Tea Association of India (TAI), said only a few parameters were being checked.

The tea board has directed importers to inform it about the storage locations of imported tea within 24 hours so that the board may draw samples. “Importers will have to ensure that origin of imported tea is mentioned in all sale invoices or contracts and there is labelling and proper display of the origin of tea,” the Tea Board official said.

The board has prohibited registered buyers from blending imported tea with Darjeeling, Kangra, Assam orthodox and Nilgiri orthodox teas, which have geographical indications (GI). Importers and exporters have to obtain a clearance certificate from the tea council portal before import or export of tea, the Tea Board official said.

According to TAI, duty-free imports of Nepal tea have been on the rise. “The fall in production of Darjeeling tea is matched by a corresponding rise in quantity of tea imported from Nepal. While the causes for diminishing production are multifarious, like changing climate, garden closures, excessive absenteeism among tea workers, unviable plantation and increasing cost of production, there is no denying that import of Nepal tea has caused the primary dent in the fortunes of the Darjeeling tea industry,” Bhattacharya said.

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ITC to raise pulpwood production by 42% to 5 MT

ITC is aiming to increase its annual pulpwood production to 5 million tonne (MT) from the current level of 3.5 MT in the next four years, as harvesting of trees grown in Odisha and Chhattisgarh under its agroforestry programme will commence soon.

Of the pulpwood production supported by ITC, around half is being used as raw material at its Bhadrachalam paper manufacturing plant in Telangana. Currently, the company uses around 1.8 MT of pulpwood annually for paper manufacturing. ITC, however, supports eucalyptus plantation under its social forestry initiative, which generates 3.5 MT of pulpwood annually.

The company still sources a major chunk of its wood requirement from Bhadrachalam and other adjacent districts. Since the production in these regions has reached a saturation point, it expanded its social forestry programme in Malkangiri and Jaypore districts (Odisha) and Bastar, Bijapur, Dantewada and Sukma districts (Chhattisgarh) a few years ago.

All these districts are located around 200 km from ITC’s Bhadrachalam paper manufacturing plant.

“In the next four years, around 30% of our wood requirement would be sourced from Odisha and Chhattisgarh,” Vadiraj Kulkarni, divisional chief executive, paperboard and speciality papers business, ITC told FE.

Around 18,000 farmers are associated with the company for growing wood which is used as key raw material in the paper industry. Since the launch of the social and farm forestry programme around two decades ago, ITC has stated that 0.18 million farmers have benefited from the initiative.

Around Rs 400 crore has been spent by the company for the promotion of the social forestry programme.

Under the social forestry model where farmers grow eucalyptus on their land, ITC supports the farmers in providing subsidised sapling, capacity building and training taking up social forestry programmes, while it does not bind the farmers to sell the wood to them. “They are free to sell the wood to other paper manufacturers,” he said. Besides, several state governments also support the programme generating additional livelihood options for those who engaged in rainfed farming.

According to a company’s note, overall, ITC’s afforestation initiative has greened more than 0.39 million hectare of degraded land in 19 districts of nine states in the country for more than a decade.

With the plantation of 1.62 billion saplings, the afforestation program powers ITC’s goal of sequestering four times the CO2 it emits through its business operations.

The Indian paper industry, estimated at `70,000 crore, gets its key raw material – wood pulp — through agro and farm forestry efforts with local communities. An estimated 1.2 million hectare is under social forestry initiatives, enabling the supply of wood pulp to key manufacturers including ITC, JK Papers, Ballarpur Industries, Star Paper and West Coast Paper Mills.

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Coal India inducts Debasish Nanda as director for business development

Coal India (CIL) has inducted a director for business development on its board — a move that will aid its diversification plan.

Debasish Nanda, who assumed charge as director-business development on July 11 will continue with the charge “till the date of his superannuation (May 31, 2025) or until further orders whichever is earlier,” CIL informed the stock exchanges. Before joining the company, Nanda was executive director at Indian Oil Corporation.

CIL also announced the name of 11 other directors, of which 6 are independent.

According to sources, Nanda will likely look into new business verticals, which the PSU miner is entering into. CIL has already formed joint ventures with Hindustan Urvarak Rasayan and Talcher Fertilizers for fertiliser manufacturing. The company is also diversifying into aluminium production, solar power production, thermal power production and coal gasification. These projects are at various stages of development.

CIL has firmed up plans to import thermal coal and has placed consecutive orders of importing 8.416 million tonne (MT). “This (coal imports) is a new vertical for us opening up a revenue stream. If directed, CIL shall perform this new mandate in future as well responsibly,” CIL chairman and managing director, Pramod Agrawal said.

While new business verticals need to be efficiently managed, CIL is likely to face fresh challenges with the coal sector opened up for commercial mining. Coal is likely to become an open market commodity with a likely regulator at the top.

Although CIL has its inherent advantages in coal mining and distribution, it also has some inherent disadvantages, mostly in areas of cost of operations, which could put CIL under competitive pressure in the future. “It is good that the ministry has not been complacent about CIL’s advantages in mining and has taken early measures to cope with the rising situation,” said Subrata Chakravarty, former chairman and managing director of Eastern Coalfields.

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Banks to report Rs 13,000-crore MTM losses in Q1 on rising bond yields: Icra

Rising bond yields will force banks to report mark-to-market losses of up to Rs 13,000 crore on their investment portfolios in the April-June quarter, a report by Icra said on Tuesday. Profits will moderate for the quarter, but improved loan growth and operating profits will ensure that banks’ bottom lines remain “steady” for FY23, the report said.

The effect of the treasury losses will be felt more by public sector banks as they hold a higher share of government securities (G-Secs) of longer tenure.

Public sector banks are expected to face mark-to-market (MTM) losses to the tune of Rs 8,000-10,000 crore, according to Icra estimates, while private banks may report MTM losses of Rs 2,400-3,000 crore in Q1FY23.

“If the yields harden substantially going forward, there could be a sequential moderation in the net profits in FY23,” Anil Gupta, vice-president of Icra, said.

Despite the headwind caused by the treasury losses on banks’ profitability, its effect will be offset by improvement in core lending operations. With the rising yields, companies prefer to meet their funding requirement by taking loans, instead of tapping the debt market. This has led to an uptick in corporate credit offtake, complementing other loan segments. The non-food bank credit grew in double digits during Q1FY23. The ratings agency expects incremental bank credit offtake of Rs 12-13 trillion for the current fiscal, higher than Rs 10.5 trillion in FY22.

“Despite these expected MTM losses, we expect the net profits of the banks to remain steady, given the expected growth of 11-12% in their core operating profits in FY23, which will more than offset the MTM losses,” Gupta said.

With 43% of floating rate loans being tied to external benchmarks and a lag in increase in deposit rates, banks are likely to show an improvement in their operating profits. The transmission of changes in policy rates takes place faster in case of externally-benchmarked loans.

On the asset quality front, banks will continue to post improvement on account of lower slippages and credit growth. The gross non-performing asset (NPA) ratio is expected to improve to up to 5.2% by the end of the current financial year, from 6% in the previous year, Icra said. However, the net NPA ratio is likely to remain range bound at around 1.6-1.8% on account of lack of recoveries and upgrades. Slippages are likely to improve further to around 2.5-2.7% in FY23 due to falling bounce rates and overdue loans, the agency said.

Despite the improvement in headline asset quality, stressed assets stood at 3.8% of standard advances as on March 31, 2022, higher than the pre-Covid level of 3.1%, the agency said.

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Soaring raw material costs posed fresh challenge in FY22, says MRF

After battling pandemic-induced difficulties, tyre major MRF faced the challenge of soaring input costs in FY22. The increase in the costs of raw materials was unprecedented as it happened continuously for months together, forcing the company to go for multiple price hikes, it said in its annual report.

“The Ukraine war has not helped either as some of the raw materials became unavailable and costlier,” KM Mammen, chairman & MD, MRF, told shareholders.

He further said the surge in fuel costs affected consumer demand, particularly in two-wheeler tyres and to some extent in passenger ones. Besides, the automobile industry faced its own challenges, the foremost being the shortage of semiconductors for vehicles. “This brought down the production of vehicles in many cases, thus bringing down the volume of our institutional sales. However, the commercial vehicle movement has been brisk for most part of the year and this has lessened our discomfort on the selling front,” Mammen said.

MRF’s 10th factory in Gujarat has ramped up production and is contributing significantly to the company’s total output. It is in the process of developing new products for new markets in India and abroad.

On the industry outlook, the company said that challenges faced with regard to availability of raw materials will remain. Moreover, restrictions in China consequent to the Omicron wave will continue to have its impact on the supply chain situation.

An early end to the war in Ukraine would ease the supply chain bottlenecks for the auto industry and also push costs downward. Investments in the production-linked incentive (PLI) scheme in the auto and auto components industries will be a big boost for automobile production in India, the company added.

On the exports, MRF’s traditional and strong markets of Bangladesh, Philippines, Indonesia, the African continent and the West Asia region showed substantial growth across categories. Its exports grew by a substantial 33% over the previous year, while exports turnover stood at Rs 1,779 crore in FY22 against Rs 1,333 crore in the previous year.

During FY22, MRF achieved a total income of Rs 19,304 crore and there was an overall increase of 18% in tyre production with all product groups showing growth. In the heavy CV product group, there was an increase of 15% over the previous year, while LCV tyres increased by around 13%. The small CV tyres increased by 44% in the three-wheel product group, while it increased by 13% for four-wheel products. Passenger & SUV showed a growth of 21%. The motorcycle and scooter product groups increased by 11% and 33%, respectively, the company said.

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IPO preparations: Unacademy founders take pay cut, may shut down some businesses

Unacademy has chalked out several cost-cutting measures, including pay cuts for the founders and shutting down “certain businesses”, to inch closer to its profitability and initial public offering (IPO) goals.

The edtech startup plans to go public in two years, and for that frugality — which hadn’t been a core value till now — will be at the forefront, according to an email sent by CEO and co-founder Gaurav Munjal to employees.

He said Unacademy will shut down certain businesses that haven’t found their product market fit, for instance, the global test preparation category.

Unacademy has acquired at least four companies in the test prep space – Handa ka Funda, NeoStencil, Swiflearn and PrepLadder.

Munjal further said the management personnel will be taking pay cuts and the founders have already done so. Besides, the company’s C-suite employees will no longer have dedicated drivers for themselves and while travelling by air, an upgrade to business class travel would have to be paid out from personal pockets.

“We have to do an IPO in the next two years. And we have to turn cash flow positive. For that, we must embrace frugality as a core value,” Munjal said in his email.

These developments come despite the SoftBank-backed edtech startup recently claiming it has Rs 2,800 crore in the bank. Chief operating officer (COO) Vivek Sinha had told FE that Unacademy had a runway of 48 months as of June 9.

Unacademy has already laid off at least 750 employees so far this year, citing cost crunch. Some fear that if more categories are shut, more employees may be sacked.

In the same email, Munjal re-emphasised the need for positive cash flow. “Now, all of these changes might make it seem that we are in a bad state. Trust me. We are not. We are in a great state. This is the final frontier that we have to conquer. Profitability. And once we do, It will change the game for us,” Munjal’s mail stated.

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OMCs to post combined loss of Rs 10,700 crore in Q1 due to retail losses: ICICI Securities

State-run oil marketing companies – Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum – may post a combined loss of Rs 10,700 crore in the first quarter of the current fiscal, ICICI Securities said on Monday.

The brokerage firm said the loss will be due to selling transport fuels at a loss of Rs 12-14 per litre even as there gross refining margins (GRMs) will remain fairly strong at $17-18 per barrel.

“We estimate GRMs to remain fairly strong at US$17-18/bbl levels (factoring-in inventory loss of US$0.1-0.2/bbl) and marketing volume growth of 17-20%, thanks to continued recovery in prospects and a weaker base. Yet, the sharply higher retail losses of ~ Rs 12/ltr in petrol + diesel combine to drive an EBITDA loss of Rs 66 bn and a net loss of Rs 107 bn for the OMCs in Q1FY23E,” ICICI Securities said.

Going forward, with some decline seen in crude in the last 2-3 days and the resultant dip in key product spreads as well, some respite will be forthcoming for the marketing losses. However, the delta from GRMs will also reduce, which will limit earnings triggers for FY23, it said.

The three city gas distributors including Indraprastha Gas (IGL), it said, are likely to report divergent trends in Q1. While IGL sees both volume and margin expansion by 48% Y-o-Y and 30% respectively, Mahanagar Gas (MGL) sees volume growth by 35%, but EBITDA/scm dips 25% YoY. For Gujarat Gas (GGL), we see volume growth of only 1%, but EBITDA/scm rise of 8%, YoY.

“Overall, for CGDs we estimate EBITDA growth of 31% and PAT growth of 36%, YoY,” it said.

ICICI Securities estimates Reliance Industries (RIL) to post highest-ever consolidated EBITDA/PAT of Rs 38,900 crore/24,400 crore, clocking a 67% growth and 77% grwoth respectively. These all-time highs would come on the back of a massive 80% growth inoil to chemical (OTC) segment EBITDA, sharply higher (up 100% YoY) retail EBITDA, and EBITDA growth of 26% YoY for RJio.

Prospects for the next nine months for RIL of course stand impacted by the estimated US$8/bbl hit from the higher duties imposed with effect from July 1.

“We expect Oil India to deliver an EBITDA of Rs 2,830 crore, up 129% YoY, and PAT of Rs 2,290 crore. These gains would be mostly driven by the sharply higher average crude price of US$108/bbl (up US$42/bbl YoY) and blended gas realisations of Rs 17/scm (up Rs 8.7/scm YoY),” ICICI Securities said.

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BoB hikes MCLR, BoM cuts the same

Bank of Baroda on Monday increased the marginal cost of funds-based lending rates (MCLR) on some tenures by 10-15 basis points (bps), effective July 12. BoB has increased its one-year MCLR by 15 bps to 7.65%, the lender said in an exchange filing.

The increase in the MCLR by BoB for July was steeper compared with June, when the bank had raised the one-year MCLR by 10 bps. The bank has kept overnight and one-month MCLR unchanged at 6.80% and 7.20% respectively. The 3-month and 6-month MCLR have been raised by 10 bps each to 7.35% and 7.45%, respectively.

Meanwhile, Bank of Maharashtra reduced its MCLR by 20-35 bps across tenures. The bank cut its one-year MCLR by 20 bps to 7.50% in July from 7.70% in the previous month. The bank’s one-year MCLR for June was one of the highest among public sector banks, according to RBI data. The bank’s shorter duration MCLRs for July are in the range of 6.90% to 7.40%.

In FY22, the bank’s deposits stood at Rs 2.02 trillion while current account, savings account (CASA) ratio as of March 31 improved to 58% compared to 54% a year ago. Cost of deposits declined to 3.61% in Q4FY22 from 3.97% in the same quarter last year.

The move comes at the time when most banks have been increasing their MCLR after the Reserve Bank of India initiated a rising policy interest rate cycle.

Earlier, HDFC Bank and ICICI Bank hiked MCLR by 20 bps each.

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Delhi-Mumbai Electric Highway soon? Nitin Gadkari’s latest statement sparks buzz around key project

Union Minister Nitin Gadkari on Monday said the government is planning to construct an electric highway between Delhi and Mumbai.

He also urged heavy vehicle owners to use alternative fuels like ethanol, methanol and green hydrogen in order to curb pollution.

Addressing an event organised by the Hydraulic Trailer Owners Association, the road transport and highways minister said the government is constructing tunnels worth Rs 2.5 lakh crore.

“Our planning is to make electric highway from Delhi to Mumbai. Just like trolleybus, you can run trolleytrucks also,” he said, without providing more details.

A trolleybus is an electric bus that draws power from overhead wires. An electric highway generally refers to a road which supplies power to vehicles travelling on it, including through overhead power lines.

Gadkari further said his ministry has taken a decision to connect all districts by four-lane roads.

Noting that pollution is a big concern, Gadkari said, “I request heavy vehicle owners to use alternative fuel like ethanol, methanol and green hydrogen as they are cost effective and import substitutes.” The minister admitted that heavy vehicle owners are facing problems because of corruption in state Regional Transport Offices (RTOs).

“So, we have to digitise all services provided by RTOs,” he added.

The minister said his aim to is to reduce road accidents and deaths. Observing that there is need to be cautious about road safety, he said “we need trained drivers”.

The minister added that as a fast growing economy, India needs needs all kinds of transportation.

Gadkari also said logistics cost in India is high compare to that in China, European Union and the US.

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